Turner’s Take Weekly: USDA Jan 16 WASDE Review

The USDA released the January WASDE, Winter Wheat Seedings, and Dec 1 Stocks report today. The big surprise was Hard Red Winter Wheat seeding were lower than expected by 2.5mm acres. The trade was looking for about 29.0mm acres of HRW wheat (KC Wheat) and the USDA projects 26.5mm acres. If projected ending stocks were not so bearish (941mm bushels for All Wheat) we would be limit up. Since the US and the world have an abundant supply of wheat the KC contract is only up 18 cents an hour after the report was released. Soft Winter wheat acres were also lower but not by the amount of Hard Winter wheat. This has led to gains in our KC vs Chicago wheat spread and I think the trend will continue to go in our favor.

As for the rest of the report, it came in around as expected. Below are the numbers for US and World ending stocks. I thought the stocks were bullish for soybeans based on expectations but we still have more than adequate soybean US stocks and global stocks. Corn was a little bearish on the US stocks and a little bullish on the global stocks. Wheat was bears for stocks but the acres miss was a much more significant bullish number.

Post-WASDE Outlook: I am going to read this report again and take a look at some of the reports that will come out later today. I’ll have all of my thoughts going forward tomorrow in Turner’s Take Market Alert but at this moment I think Bean and Corn rallies should probably be sold while we need to take a wait and see approach with Wheat. On a first look basis it looks like we will have adequate to burdensome stocks in both soybeans and corn for this year and next year’s crop. I would say the same about Wheat because even though we are losing acres the stocks are still large due to low US export demand, large global stocks, and a strong US Dollar. Stay tuned tomorrow for an update on market outlooks going forward and trade ideas.

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About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.